As one of only four Community Development Financial Institutions (CDFIs) in Eastern Kentucky, Redbud Financial Alternatives, Inc. (“Redbud”) reached a major milestone recently in its efforts to combat predatory lending in the local community.
Predatory lending is any lending practice that imposes unfair and abusive loan terms on borrowers, including high-interest rates, high fees and terms that strip the borrower of equity. To date, Redbud has made more than $1 million in fair and affordable consumer loans in East Kentucky, collectively saving clients more than $200,000 in interest and fees. Redbud has also helped more than 250 East Kentuckians with their personal, auto and debt consolidation loans and accompanying financial education.
Redbud, a certified CDFI headquartered in Hazard, is focused on transforming credit from an obstacle to an opportunity for Appalachian families. Redbud’s parent organization is Housing Development Alliance (HDA), a nonprofit affordable housing developer, with nearly 30 years of experience in providing housing for low-income families in East Kentucky. HDA founded Redbud after recognizing that many housing applicants struggled with poor credit and few resources for improving their credit.
“Credit is a powerful tool for building a future, but it can be complicated and confusing. At Redbud, we help clients understand the benefits and risks of credit and how they can use it for their own benefit,” said CDFI Director Louis Irvin.
To ensure a Redbud loan is helping rather than hurting clients, Redbud pairs personalized financial education with their affordable loan program. Each client receives a credit report review from Redbud’s Loan Officer, allowing clients to understand the relationship between their borrowing habits and their ability to access credit.
“All of our loan products are developed in response to community need. We ask, where is expensive credit hurting the people who can least afford it, and how can we help?,” Irvin said.
In 2021, Redbud’s average monthly lending grew from $5,000 to more than $80,000, reflecting the additional capacity of Redbud’s new loan officer, Gary Brewer, and Redbud’s new auto loan product. This growth was made possible by critical pandemic funding support from Opportunity Finance Network and the CDFI Fund’s Rapid Response Program.
In 2022, Redbud is expanding financial education efforts into eastern Kentucky schools through the Junior Achievement program to ensure students are meeting the measurements of the Kentucky Financial Empowerment Commission. Redbud also anticipates making another $1 million in fair loans in 2022. Investors interested in being part of this growth are invited to contact Redbud to learn more.
To learn more about Redbud’s loan and financial education programs, or to inquire about investing in Redbud, visit its website at, redbudloan.org, or call, (606) 716-6100. Redbud’s office is in the same building as HDA, which is located at 2871 North Main Street, Hazard.